Intel Capital, the venture capital arm of semiconductor giant Intel Corp., has hired UBS to explore the sale of around $1 billion worth of its investment portfolio, as originally reported by Bloomberg.
Some notes on this:
1. Intel Capital currently has around 430 active portfolio companies, and my understanding is that around a quarter of them could be sold. The primary motivation is strategic rather than financial, and reflective of Intel Corp.’s (INTC) own changing focus. For example, expect to see most consumer tech holdings on the block, while anything related to drones, wearables and IoT remains untouched. This means that there could be some objective “winners” included in the deal, which could help get the block sold in one piece (which is Intel Capital’s preference).
2. This is not the first time that Intel Capital has launched a massive secondary sale. It also did so in 2002 or 2003, just as the dotcom bust had broken wide open. In that case, it was mostly about culling winners from losers.
3. There are no plans to cut headcount, as the move is viewed as freeing up time for existing staffers to work on new investment opportunities.
4. Intel Capital isn’t commenting on this, save for pointing reporters to a February blog post by new boss Wendell Brooks (longtime Intel Capital leader Arvind Sodhani left last summer). In the post, Brooks says that Intel Capital plans to continue investing between $300 million and $500 million per year, with more of a focus on sourcing deals (it currently leads around half of its deals, but wants that figure to hit 2/3). Seems like the blog post might have been laying the PR groundwork for the portfolio sale news leaking out…